8.  On 9 November 1992, at an auction organised by the Bolesławiec District Office, the applicants, who were the only participants in the bid, purchased real property owned by the District Office for 202,000 zlotys (PLN).
9.  On 2 August 1996 the Bolesławiec District Prosecutor, acting on behalf of the State Treasury and relying on the 1991 Law on unjustified enrichment at the expense of the State Treasury, sued the applicants in a civil court, seeking payment in the amount of PLN 111,046. The prosecuting authorities referred to Article 7 of the Code of Civil Procedure (see paragraph 31 below) and invoked their powers as the guardians of the legal order. They submitted that the applicants had purchased the property concerned under a compensatory scheme for persons who had abandoned their property on territories beyond the Bug River that had belonged to Poland before the Second World War. Under this scheme, governed chiefly by the provisions of the Land Administration and Expropriation Act of 29 April 1985 (“the Land Administration Act” – see paragraphs 38-44 below), the applicants had a “right to credit”, that is, the right to count the price of the abandoned property towards the price of the property to be purchased from the State Treasury.
10.  The prosecuting authorities further argued that the purchase price, which partly comprised compensation for the property left by the applicants’ legal predecessors in Trembowla, in the former Polish territories beyond the Bug River, had been calculated wrongly. They averred in that respect that the value of the property, as assessed by expert A.Ż., amounted to PLN 125,130. Later, a month before the contract was concluded, the same expert had assessed the value of the same property at PLN 218,985. The prosecuting authorities, harbouring certain doubts as to the soundness of the estimates, had instituted investigations and appointed a new expert, who had estimated the value of the abandoned property at only PLN 90,953. Consequently, as the value of the house that the applicants’ legal predecessors had abandoned in Trembowla was much lower than the price the applicants had paid for the property in Bolesławiec, the State had sold them the latter property at a considerable loss. The plaintiff prosecuting authority further argued that the first expert, A.Ż., had had regard to the market value of the Trembowla property, whereas under the relevant legislation he should have taken the technical value of the property into account. As the applicants had refused to comply with the Bolesławiec District Office’s demand to pay PLN 111,046, the prosecuting authorities claimed that the applicants should repay that amount to them.
11.  The applicants argued in their pleadings that the State Treasury, which had sold them the property in Bolesławiec under the provisions of the Land Administration Act, had had the expert estimates at its disposal and had not put forward any objections at that time. They submitted that the estimate relied on by the prosecuting authorities in their statement of claim was based on the assumption that the property in Trembowla was in a rural location, which was incorrect as it was situated in a town.
12.  On 18 December 1997 the Nowy Sącz Regional Court dismissed the prosecutor’s claim against the applicants, considering it to be unfounded.
13.  The court first observed that the applicants had bought the property at a public auction organised by the Bolesławiec District Office under the compensation scheme for former owners of properties in the former Polish territories. For the purposes of the auction they had submitted to the authorities two successive expert opinions concerning the value of the property owned by their legal predecessors in Trembowla, prepared by expert A.Ż. He had estimated the value of the property abandoned in Trembowla at PLN 218,985. As the value of the property they had purchased from the Bolesławiec Municipality amounted to PLN 202,000, the applicants had not been obliged to pay anything to the municipality.
14.  The court considered that the crux of the legal issue it had to resolve lay in the determination of the methods and criteria to be used when assessing the value of properties abandoned in the pre-war Polish territory. It referred to the Land Administration Act, applicable to the compensatory scheme at that time, and to the Cabinet’s ordinance issued on the basis of section 81 of said Act. Under section 6 of the ordinance, the value of the abandoned land was to be assessed with reference to the current market price of land, and the value of houses with reference to their so-called reconstruction value.
15.  The court further observed that the relevant legislation did not lay down any other criteria for the valuation of the properties concerned. The properties therefore had to be valued on a case-by-case basis, with reference to all the factors relevant to a particular case. In such circumstances, the court had to make a choice relying on the conclusions of the experts commissioned to submit their reports to the court.
16.  Accordingly, the court took account of expert opinions prepared by experts W.A. and A.M. for the purposes of the investigations conducted by the prosecuting authorities in connection with the purchase of the property. It also had regard to the findings and estimates made for the purpose of the civil proceedings by experts A.D., J.K. and T.L., who had been assigned to the case by the court. The court further noted the conclusions of an opinion prepared at the applicants’ request by expert S.S.
17.  The court concluded that, in the light of the various arguments advanced by the experts, the price paid by the applicants in 1992 corresponded to the value of the property abandoned in Trembowla.
18.  Lastly, the court had regard to the fact that the applicants had, in the meantime, sold the property in question and obtained PLN 180,992 for it. This, in the court’s view, confirmed its finding that the price for the property, fixed by the District Office in 1992 at PLN 202,000, had been excessive.
19.  The court further ordered the Bolesławiec District Office of the State Treasury to repay to the applicants the litigation costs they had borne in the proceedings, in the amount of PLN 14,177.26. The court referred to Article 98 of the Code of Civil Procedure, taken in conjunction with Article 106.
20.  The prosecuting authorities appealed, claiming that the Regional Court, in estimating the value of the properties concerned, had failed to take into account all the relevant expert opinions. In addition, the Regional Court’s decision to award the legal costs borne by the defendants had been ill-founded. They argued that, since the plaintiff in the case had been the prosecutor, the general principle whereby the unsuccessful party in a civil case bore the litigation costs, enshrined in Article 98 of the Code of Civil Procedure, was not applicable.
21.  The applicants, in reply to the appeal, submitted that the assessment of the value of the abandoned property had been thorough and had been based on five expert opinions prepared by seven experts.
22.  As to the litigation costs, they argued that the prosecuting authorities, while acting on behalf of the District Office, had in fact been seeking to protect the financial interests of the State Treasury rather than to act as the guardian of the legal order. Hence, the prosecution had not been acting under Article 7 of the Code of Civil Procedure, that is, to protect the rule of law or citizens’ rights, or in the public interest.
23.  In such a situation, had the prosecution been exempted from operation of the general principle of responsibility of the unsuccessful party for the litigation costs, they would have been placed at an unfair advantage vis-à-vis the other party.
24.  Hence, Article 106 of the Code of Civil Procedure should be applied to their case in the manner advanced by the Supreme Court, which had stated that the term “State Treasury” used in Article 106 of the Code of Civil Procedure should by no means imply that an award of costs for or against the State Treasury was ruled out in situations in which the prosecuting authorities acted in a civil case representing the financial interests of the State Treasury (decision of 6 July 1966, I Cz 62/66 OSP 1967/6/140).
25.  On 7 April 1998 the Cracow Court of Appeal dismissed the prosecutor’s appeal in so far as it related to the price of the property concerned. The court noted that the first-instance court had had regard to expert opinions prepared by seven experts. It had carefully examined their conclusions and explained convincingly, with reference to the detailed findings of their reports, why it had found the price paid by the applicants for the property to be correct.
26.  The court also partly amended the first-instance judgment by refusing to award the applicants their legal costs. The court considered that the situation of a prosecutor bringing a civil action on behalf of a third party represented a special case. He or she could not be regarded as a mere party to civil proceedings. This singular nature of the prosecutor’s role in a civil case was reflected in the rule on costs contained in Article 106 of the Code of Civil Procedure. Under that provision, the participation of the prosecutor in a civil case did not entail for the other party a right to reimbursement of the litigation costs. Article 106 was fully applicable to the circumstances of the case. Therefore, and in view of the fact that the Bolesławiec District Office had not joined the proceedings as a plaintiff, all litigation costs, including the costs borne in connection with the appellate proceedings, had to be borne by the defendants.